...A STUDY ON PROGRESSIVE INCOME TAX A CASE STUDY OF US & BRAZIL ________________________________________ INSTRUCTOR: DALIA EL-EDEL ECON 310-02 TERM PAPER - BY: JIHAD MASHAMOUN 900-08-2910 LARA AZZAM 900-09-3033 LUJANE MULLA 900-10-1019 ABSTRACT There is no doubt that the widening income disparities were a major driving force fueling the recent uprisings within the Middle East. One solution that has been put forth for adoption is the progressive income tax. This paper intends to assess the theoretical bases and popular arguments surrounding this very dynamic topic. The first section provides a brief definition of progressive taxation in contrast with other forms of taxation. It also discusses the most dominant for and against arguments both from a theoretical and an empirical point of view. The second section provides a case study of progressive income taxes in a leading industrial and developed country; the US. The third section provides a comparative study from Brazil; an emerging economy that has recently adopted progressive taxation. Based on the theoretical analysis and the two case studies, the paper concludes by providing policy recommendations that should be implemented in order to complement progressive taxation and gain the best and most balanced results in terms of equality, efficiency and revenues. Finally taxation is only part of the economic equation; proper efficient tax system is only one step forward towards creating equal opportunities through proper...
Words: 4032 - Pages: 17
...Federal tax reform has been a topic of discussion for some time now. As the national deficit has continued to increase over the past few years, so has the priority for this analysis. Although a number of proposals have been submitted, the problem is coming to an agreement on how exactly the code should be reformed, if reformed at all versus starting with a brand new code altogether. The problem is that there is no cookie cutter tax system that will be fair to all. With that being said, is a flat tax the way to go? There is no tax system that would be beneficial to all Americans. Just like any tax reform, a flat tax system has its own set of pros and cons. For example, a flat tax system would eliminate the current extensive tax code that is extremely difficult to interpret. It would result in an easier understanding of the tax code as well as reduce the chance for errors and tax fraud (Sonic, 2013, para. 7). Additionally, it would cause a reduction in the need for paid tax preparers, which is actually a pro and con. It would save taxpayers money by eliminating the need for paid tax preparers but at the same time would also cause a reduction in the workforce for that industry (Sonic, 2013, para. 7). As a result, this would cause a rise in the number of displaced workers’ as well as putting numerous tax software companies out of business. Moving on, a flat tax would eliminate the ability to create tax loopholes by the government, as previously done, for personal favors or campaign...
Words: 1339 - Pages: 6
...positive B. negative C. zero D. impossible to calculate without further information 2. When disposable income (DI) is zero, ______ . A. autonomous consumption is equal to induced consumption B. autonomous consumption is equal to total consumption C. induced consumption is equal to total consumption D. autonomous consumption is zero E. induced consumption is greater than zero 3. The minimum amount that people will spend even if DI is zero is called _____ consumption. A. autonomous B. permanent C. induced D. total E. special 4. According to the permanent income hypothesis, if a person won the lottery, they would spend _____ that year. A. all of the winnings B. some of the winnings C. none of the winnings D. more than all of the winnings 5. The permanent income hypothesis is a theory from economist _____ . A. Adam Smith B. John Maynard Keynes C. Thorstein Veblen D. Milton Friedman E. Karl Marx 6. Conspicuous consumption is a theory from economist _____ . A. Adam Smith B. John Maynard Keynes C. Thorstein Veblen D. Milton Friedman E. Karl Marx 7. In the U.S., the largest component of C is ______ . A. durable goods B. services C. nondurable goods D. inventory E. residential housing 8. The consumption function tells us that, as income rises, consumption _____ . A. declines B. remains the same C. rises but more slowly than disposable income D rises but more quickly than disposable income 9. When DI levels are very low (close to zero), C is _____ . A. zero B. higher than DI C. lower than...
Words: 3486 - Pages: 14
...ACC 555 Entire Course Individual Tax Research and Planning https://homeworklance.com/downloads/acc-555-entire-course-individual-tax-research-and-planning/ ACC 555 Entire Course Individual Tax Research and Planning ACC 555 Assignment 1 – Tax Research Imagine that the Internal Revenue Service (IRS) has selected your client for an audit. Your client and the IRS disagree about the amount of tax revenue owed. You agree with your client’s position. You must provide a defense for the client that requires you to research the issues in order to render an educated opinion on a course of action for your client. Note: You may create and/or make all necessary assumptions needed for the completion of this assignment. Write a three to four (3-4) page paper in which you: 1. Prepare a defensible strategy for the client by using the six (6) steps in the tax research process. Propose how each of the steps provides support for the client’s position. 2. Create a fact-based argument that you plan to propose to the client as a defense of his / her position with the IRS. ACC 555 Assignment 2 – Tax-Deductible Losses Write a six to eight (6-8) page paper in which you: 1. Research the manner in which tax-deductible losses originally became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses overall are reasonable. Provide support for your conclusions. 2. Suggest what you believe to be a significant tax-deductible loss. Discuss whether or not the deductibility...
Words: 2347 - Pages: 10
...Student’s name Subject Title Lecturer’s Name Date of submission Income Inequality Introduction The problem of an increase in household income inequality has been a major talk point in political discussion and public policy. According to Winston Churchill, inequality is unavoidable especially in capitalist societies. However, President Barrack Obama views inequality as not only a major problem but as a defining problem of this generation. It cannot be disputed that income inequality in the United States has been rising over the past four decades. The trend is evident when income is measured both before and after taxes. The income inequality in the U.S today can be compared to those of other developed countries. However, the country ranks amongst the worst in inequality especially after taxes and transfers. This means that less income that is received from higher income households trickles down to lower income earners. A recent study in 2011 revealed that the top earners income increased by around 275% after income transfers and federal taxes. Today, there is ongoing debate as to the effects, causes and solutions of the income inequality. Over the years, debates have arisen whether the income inequality gap in America is a social or an ethical problem. Despite businesses breaking profit records, these income gains have been concentrated on the top 1% (Glenn 58). It is often argued that income inequality is a social injustice and that it is unfair. However, social injustice...
Words: 1866 - Pages: 8
...Global Issues, Role of United Nations and Japan’s International Contributions Contents Introduction 3 History of Overpopulation 3 Industrial Revolution 3 Invention of Birth control 4 Risks of Overpopulation 4 Food 4 Water Shortage 4 Civil Conflict 5 Poverty 5 Case Study 5 Government policies 6 Taxation policy 6 Education Subsidies 6 Government Transfers 6 Effectiveness Of Government Policies 6 Conclusion 7 References 8 Introduction Overpopulation as defined by Dhirubhai Ambani is “where an organism’s numbers exceed the current carrying capacity of its habitat” (Ambani, 2013) There are many causes of overpopulation and overpopulation occurs when the number of organisms is of too great a number compared to the relevant resources and as a result, resources such as the water and essential nutrients they need to survive are inadequate. This can be a result from an increase in births, a decline in mortality rates, an increase in immigration, or an unsustainable biome and depletion of resources. This paper seeks to discuss how overpopulation began as well as the risk it carries. History of Overpopulation Industrial Revolution Prior to the industrial revolution, the world’s population did not change much. This was probably due to the fact that resources were difficult to come by. People were worried their ability to provide for their families would not be adequate. Furthermore, poor nutrition and famines were common. The average life expectancy...
Words: 1588 - Pages: 7
...a A tax rate that increases as the tax base increases is an example of what kind of tax rate structure? A. Progressive. B. Proportional. C. Regressive. D. Recessive b A tax rate that remains the same as the tax base increases is an example of what kind of tax rate structure? A. Progressive. B. Proportional. C. Regressive. D. Recessive c A tax rate that increases as the tax base decreases is an example of what kind of tax rate structure? A. Progressive. B. Proportional. C. Regressive. D. Recessive. b A tax rate structure where the tax rate remains at the same rate regardless of the tax base is: A. A progressive rate structure. B. A proportional rate structure. C. A regressive rate structure. D. None of the above d Which of the following is an example of a regressive tax? A. Federal income tax. B. State and local taxes levied on property. C. Sales tax. D. Social security tax a The federal income tax is an example of a: A. Progressive rate structure. B. Proportional rate structure. C. Regressive rate structure. D. Flat tax structure c Jake earned $15,000 and paid $1,500 of income tax, while Jill earned $40,000 and paid $3,000 of income tax. The structure of the tax their income is subject to is: A. Progressive. B. Proportional. C. Regressive. D. Flat. d Jordan and Paul, a married couple, have taxable income of $48,025 which is taxed as follows: $16,700 X 10%= 1,670.00 (48,025 - 16,700) X 15%= 4,698.75 Total...
Words: 594 - Pages: 3
...flat tax system is better than progressive tax. Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue . A flat tax would be a certain percent of gross income to be paid by all. Individuals or businesses would pay the same percentage regardless of income, with no deductions. But that would be just as illegal as the system we have now. There is no law allowing the government to collect an income tax. On the other side, A progressive tax is a tax which increases as a percentage of one's wealth. Using the federal income tax as an example, a person who makes between $0-$7,500 pays no taxes, any income between $7501 and $30,650 is taxed at 15%, up to any income above $336,551 being taxed at35%. A progressive tax differs from what people call "regressive" taxes, like sales tax, which takes a larger percentage of money from individuals with less money .First of all, Progressive taxation is widely supported by experts in economics and political science from many different theoretical camps; in the United States and Europe, the majority of authorities supports a progressive tax and advance many arguments for it. For example, they say that progressive tax gives a government more revenue while also enhancing opportunity for its lower and middle class citizens. Without progressive taxes...
Words: 1815 - Pages: 8
...remain. The first is third-party verification of taxable income. There is a lot of that in Scandinavia, but even so Sweden remains an outlier. The second one only seems to apply to Denmark: It has a clean and transparent tax system, without many loopholes and deductions. This keeps people from sheltering their income. It also keeps high-income foreigners from coming to or staying in your country. (Native Danes, in contrast, seem to be quite attached to their homeland.) Third, the Scandinavian countries subsidize a lot of things that are complementary to work – such as education, child care, elder care and transportation – thereby compensating for their high taxes. Here again, they are outliers. Other Organization for Economic Cooperation and Development countries reach very similar participation rates with very low levels of such subsidies. Would those policies work in other countries? Perhaps. But perhaps they are all just manifestations of a highly productive public sector that the people like to put to use to do stuff. Furthermore, the high taxation caused a lot of issue. One of the issues is inadequate income, the total outcome of all of the effects listed below is a large tax burden. And only workers feel the brunt of this burden, because only workers create wealth. When all of these effects are combined, the tax burden on the average worker is currently about 73 percent of income. So people can't live on their incomes. Second, it also causes the issue of low wages. Multiple...
Words: 1079 - Pages: 5
...average rate at which an individual or corporation is taxed. The effective tax rate for individuals is the average rate at which their earned income is taxed. The effective tax rate for a corporation is the average rate at which its pre-tax profits are taxed. An individual's effective tax rate is calculated by dividing total tax expense by taxable income. For corporations, the effective tax rate is computed by dividing total tax expenses by the firm's earnings before taxes. The effective tax rate is the net rate a taxpayer pays if all forms of taxes are included and divided by taxable income. The effective tax rate is often a more accurate representation of a taxpayer's tax liability than its marginal tax rate. Two companies that are in the same marginal tax bracket, for example, may end up with different effective tax rates depending on their earnings. This occurs particularly with a progressive, or tiered, tax system, where different levels of income are taxed at different rates. For example, the first $100,000 of income may be taxed at 10%, and income between $100,001 and $500,000 might be taxed at a rate of 15%. The corporation's income is taxed at the various levels, and to determine the effective (or average) tax rate, the total tax is divided by the total taxable income The term effective tax rate has different meanings in different contexts. Generally its calculation attempts to adjust a nominal tax rate to make it more meaningful. It may incorporate econometric, estimated...
Words: 2108 - Pages: 9
...ACC 555 Entire Course Individual Tax Research and Planning https://homeworklance.com/downloads/acc-555-entire-course-individual-tax-research-and-planning/ ACC 555 Entire Course Individual Tax Research and Planning ACC 555 Assignment 1 – Tax Research Imagine that the Internal Revenue Service (IRS) has selected your client for an audit. Your client and the IRS disagree about the amount of tax revenue owed. You agree with your client’s position. You must provide a defense for the client that requires you to research the issues in order to render an educated opinion on a course of action for your client. Note: You may create and/or make all necessary assumptions needed for the completion of this assignment. Write a three to four (3-4) page paper in which you: 1. Prepare a defensible strategy for the client by using the six (6) steps in the tax research process. Propose how each of the steps provides support for the client’s position. 2. Create a fact-based argument that you plan to propose to the client as a defense of his / her position with the IRS. ACC 555 Assignment 2 – Tax-Deductible Losses Write a six to eight (6-8) page paper in which you: 1. Research the manner in which tax-deductible losses originally became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses overall are reasonable. Provide support for your conclusions. 2. Suggest what you believe to be a significant tax-deductible loss. Discuss whether or not the deductibility...
Words: 2347 - Pages: 10
...Chapter 1 An Introduction to Tax SOLUTIONS MANUAL Discussion Questions: 1) [LO1] Jessica’s friend Zachary once stated that he couldn’t understand why someone would take a tax course. Why is this a rather naïve view? Taxes are a part of everyday life and have a financial effect on many of the major personal decisions that individuals face (e.g., investment decisions, evaluating alternative job offers, saving for education expenses, gift or estate planning, etc.). 2) [LO1] What are some aspects of business that require knowledge of taxation? What are some aspects of personal finance that require knowledge of taxation? Taxes play an important role in fundamental business decisions such as the following: • What organizational form should a business use? • Where should the business locate? • How should business acquisitions be structured? • How should the business compensate employees? • What is the appropriate mix of debt and equity for the business? • Should the business rent or own its equipment and property? • How should the business distribute profits to its owners? One must consider all transaction costs (including taxes) to evaluate the merits of a transaction. Common personal financial decisions that taxes influence include: choosing investments, retirement planning, choosing to rent or buy a home, evaluating alternative job offers, saving for education...
Words: 6943 - Pages: 28
...AVI-YONAHFINAL.DOC FEBRUARY 26, 2002 2/26/02 5:38 PM Book Review Why Tax the Rich? Efficiency, Equity, and Progressive Taxation Reuven S. Avi-Yonah† Does Atlas Shrug? The Economic Consequences of Taxing the Rich. Edited by Joel B. Slemrod.∗ Cambridge: Harvard University Press, 2000. Pp. 524. $57.95. In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers” —the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “ second handers” ). Rand wrote in a world in which the top marginal federal income tax rate in the United States was 91% (beginning at taxable income of $400,000).2 This is an unimaginably high rate by today’s standards, when the dominant view in Washington is that a marginal rate of 39.6% (the top † Irwin I. Cohn Professor of Law, University of Michigan. I would like to thank Yossi Edrey, Allen Graubard, David Hasen, Judy Herman, Don Herzog, Jim Hines, Bob Kuttner, Doron Lamm, Jeff Lehman, Kyle Logue, Dan Shaviro, Joel Slemrod, Dennis Ventry, and Larry Zelenak for their extremely helpful suggestions. All errors are mine. * Paul W. McCracken Collegiate Professor of Business Economics and Public Policy, University of Michigan. 1. AYN RAND, ATLAS...
Words: 13482 - Pages: 54
...ACC 555 Entire Course Individual Tax Research and Planning https://homeworklance.com/downloads/acc-555-entire-course-individual-tax-research-and-planning/ ACC 555 Entire Course Individual Tax Research and Planning ACC 555 Assignment 1 – Tax Research Imagine that the Internal Revenue Service (IRS) has selected your client for an audit. Your client and the IRS disagree about the amount of tax revenue owed. You agree with your client’s position. You must provide a defense for the client that requires you to research the issues in order to render an educated opinion on a course of action for your client. Note: You may create and/or make all necessary assumptions needed for the completion of this assignment. Write a three to four (3-4) page paper in which you: 1. Prepare a defensible strategy for the client by using the six (6) steps in the tax research process. Propose how each of the steps provides support for the client’s position. 2. Create a fact-based argument that you plan to propose to the client as a defense of his / her position with the IRS. ACC 555 Assignment 2 – Tax-Deductible Losses Write a six to eight (6-8) page paper in which you: 1. Research the manner in which tax-deductible losses originally became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses overall are reasonable. Provide support for your conclusions. 2. Suggest what you believe to be a significant tax-deductible loss. Discuss whether or not the deductibility...
Words: 2347 - Pages: 10
...ACC 555 Entire Course Individual Tax Research and Planning https://homeworklance.com/downloads/acc-555-entire-course-individual-tax-research-and-planning/ ACC 555 Entire Course Individual Tax Research and Planning ACC 555 Assignment 1 – Tax Research Imagine that the Internal Revenue Service (IRS) has selected your client for an audit. Your client and the IRS disagree about the amount of tax revenue owed. You agree with your client’s position. You must provide a defense for the client that requires you to research the issues in order to render an educated opinion on a course of action for your client. Note: You may create and/or make all necessary assumptions needed for the completion of this assignment. Write a three to four (3-4) page paper in which you: 1. Prepare a defensible strategy for the client by using the six (6) steps in the tax research process. Propose how each of the steps provides support for the client’s position. 2. Create a fact-based argument that you plan to propose to the client as a defense of his / her position with the IRS. ACC 555 Assignment 2 – Tax-Deductible Losses Write a six to eight (6-8) page paper in which you: 1. Research the manner in which tax-deductible losses originally became part of the U.S. Tax Code. Conclude whether or not tax-deductible losses overall are reasonable. Provide support for your conclusions. 2. Suggest what you believe to be a significant tax-deductible loss. Discuss whether or not the deductibility...
Words: 2347 - Pages: 10
